Since 90% of investor performance is determined by asset allocation, we take asset allocation as seriously as stock picking. Our asset allocation process involves:

• A rigorous examination of each investor's investment objectives (in both return and risk) and constraints (time horizon, liquidity needs, tax considerations, regulatory requirements and unique features).
• The investment policy statement provides the input into an efficient-frontier model, which is driven by Barclays Capital data. The efficient-frontier that is subsequently created compares favourably with an ideal, but unrealistic, portfolio that contains significant shorting of asset classes.
• A portfolio with a broad diversification of asset classes will be created. These asset classes include equities, government and corporate bonds, cash, commodities, real assets and hedge funds.
• We focus on the strategic asset allocation and tend to favour a constant mix approach, selling into strength and buying into weakness, although we will monitor the tactical environment. We also monitor allocations to ensure they remain inside a target range, around a point target.
• It is a dynamic and very individual process, involving monitoring and feedback. Consequently, the portfolio will be tailored according to a client's requirements. We are not actuaries, however, and would expect guidance for a large pension scheme from the relevant intermediary.
• A portfolio can be set up according to a return/income and/or risk requirement and for asset/liability management. We can utilise cash flow matching for immediate liabilities and then focus on the strategic allocation for the longer term.